What are the key ratios and measures in Warehouse Management?

There is high probability of wastage of resources in a warehouse unless properly managed. So, each measure has to be properly designed based to provide information to make decision. One may find warehouses with lot of people sitting idle as very less receipt or dispatch, a lot of warehousing machinery is used for very limited period of time, and finally, a lot of warehouse space is vacant. So, one need to set up measures accordingly.

 

1.     Manpower utilization: Number of (receipt+ dispatch) per person per day. Also average value($) of inventory handled per person per day

2.     Spaced utilization:  average percentage of space utilized

3.     Inventory storage: average number of days the manufacturing/procured inventory remains in warehouse (except spare parts for office machinery and office consumables)

4.     Uses of warehousing equipment: If an equipment is used for few hours in a month, the same can be rented from Logistics Company at a much lower cost on long term agreement basis.

 

 

Thanks

Agree with Mr. Fazlur

The order of metrics might vary by types of warehouses--small internal operation supporting a manufacturing company would differ from a retail distribution center. All would measure inventory accuracy through periodic "cycle counts" of a small sample, counted daily, weekly or monthly and less frequent "total inventory", usually conducted annually. The inventory accuracy is measured by a number of factors: correct item in the assigned location, correct quantity, total dollar amount in inventory as compared to expected value. Other important metrics: items picked per day and presented for shipment are accurate in both the correct item and quantity. Items picked and shipped within required time frame. Items received were put away or cross docked to outbound requirements within established timeframes. Items received match up with purchase order requirement for both the item number and quantit. Percentage of allocated space is effectively used to store each item, i.e. The shelves are sized for what is in them and it doesn't look like a city skyline with wasted space between items. Items are stored in accordance with the best efficiency to reduce errors and time to pack and ship. This is known as "part velocity". Put away/Storage is not organized by product type but by cubic size required and likelihood to be shipped soonest. Fast moving, small items are closest to packing stations and are no higher than eye level. Returns, customer discovered errors, audits and customer visits to interview receiving personnel are other ways to measure warehouse performance and gauge internal and external customer satisfaction with the warehouse.

The key ratios in terms of warehouse management as follows:

Carrying Cost of Inventory

Warehouse manager knows that the inventory in their warehouse is costing them—and it is important to quantify  how much this cost is, including less visible costs such as capital costs, inventory risk, inventory service costs etc.

Inventory Turnover

Inventory turnover measures how many times per year your distribution center is able to go through its entire inventory. It is calculated by dividing the cost of goods sold by average inventory.

Order Picking Accuracy

Order picking accuracy is calculated by dividing the number of total orders by the perfect order rate.

Inventory to Sales Ratio

Inventory to Sales Ratio is calculated by dividing the end-of-month inventory balance by the sales for that same month.

Units per Transaction

The Units per Transaction KPI is calculated by dividing number of units sold by number of transactions.

Rate of Return

The Rate of Return is calculated by dividing number of units returned by the number of units sold.

Inventory Accuracy

Inventory accuracy is calculated using the percentage of accuracy between physical inventory count and database inventory count.

Back Order Rate

Back Order Rate is calculated by dividing the orders that cannot be filled at time of purchase by the total orders placed.

Perfect Order Rate

Perfect Order Rate is calculated by dividing the orders that completed without incident by the total orders placed.

The order of metrics will differ with the type of warehouses--small internal operation supporting a manufacturing company and the second one is a retail distribution center.

These warehouses would measure inventory accuracy through periodic "cycle counts" of a small sample, counted daily, weekly or monthly and less frequent "total inventory", usually conducted half yearly & annually. The inventory accuracy is measured by a SKU, Quantity & Value wise..

Most Important metrics:

Items picked per day and presented for shipment are accurate in both the correct item and quantity.

Items picked and shipped within required time frame.

 Items received were put away or cross docked to outbound requirements within established timeframes.

Items received match up with purchase order requirement for both the item number and quantity.

Percentage of allocated space is effectively used to store each item, i.e. the shelves are sized for what is in them and it doesn't look like a city skyline with wasted space between items.

 Items are stored in accordance with the best efficiency to reduce errors and time to pack and ship. This is known as "part velocity".

 Put away/Storage is not organized by product type but by cubic size required and likelihood to be shipped soonest.

Returns, customer discovered errors, audits and customer visits to interview receiving personnel are other ways to measure warehouse performance and gauge internal and external customer satisfaction with the warehouse.

I mean this is what measures have understood the question

1. Accuracy

2-innovation

3-constant review

4. find solutions

X create goals and achieve them

It depends on what kind of warehouse  you are asking about.   Are you a third-party storage that sends product to distribution centers or are you the distribution center.  For a distribution center, probably the two most important metrics would be pieces per pallet and cases per man hour. There are dozens, if not hundreds of measurement and metrics that can be tracked. Both of these metrics track productivity, which in turn affect your expenses (labor).  Pieces per pallet you want as high as you can get, because when moving product from the dock to storage, you spend 'X' time, (about 2.4-3 minutes at my warehouse) Moving each pallet.  Also, when replenishing pick locations, you want high pieces per pallet, so that the stock lasts longer, and you can replenish less frequently.  Needing to spend less time with forklifts during selection.  Cpmh measures your production rate for all your employees, though pallets per hour is better for your forklifts. You increase your cpmh by keeping your pick path short, so that the travel time for the selectors is as fast through the path as possible.

The Key ratio of warehouse Management.

a. Having Good knowledge of material / Safety work / commmand .  "STORE KEEPER "

a. Is to maintain the Team work / managed the team to utilized in proper work in duty hours.

b. Utilized the equipments " Forklifts / Telehandler " trained in warehouse system. ( Proper Location on High Racks / and floor. 

C. Maintain the Inventory to reduce the stock valve not to exceed more than the budget.  

 

I fully agree with the answers been added by EXPERTS...............Thanks.

It mainly depends upon the operations of the company like manufacturing differs from retail distribution. However inventory control is common.The inventory accuracy is measured by a number of factors. For Instance correct item in the assigned location, correct quantity, total  cost amount in inventory as compared to expected value. Other important metrics: items picked per day and presented for shipment are accurate in both the correct item and quantity. Items are stored in accordance with the best efficiency to reduce errors and time to pack and ship. This is known as "part velocity. Fast moving items should not affect eye-level.

I agree with Ramnath Kini Manager-Supply chain